Fraud

Question 1

What is the law on fraud?

Answer 1

Fraud Act 2006, s1
(1) A person is guilty of fraud if he is in breach of any of the sections listed in subsection (2) (which provide for different ways of committing the offence).
(2) The sections are—
(a) section 2 (fraud by false representation),
(b) section 3 (fraud by failing to disclose information), and
(c) section 4 (fraud by abuse of position)

Question 2

What is the sentence for fraud?

Answer 2

Triable either way
10 years’ imprisonment and/or a fine on indictment
Twelve months’ imprisonment and/or a fine summarily

Question 3

What is the essence of the fraud offences?

Answer 3

The essence of these fraud offences is in the conduct and ulterior intent of the defendant. This means that a defendant’s unsuccessful ‘attempt’ to commit the offence of fraud may amount to the commission of the substantive offence, effectively excluding the possibility of an offence under the Criminal Attempts Act 1981

Question 4

What is the meaning of gain and loss?

Answer 4

Fraud offences under s2, 3 and 4 are all committed when D carries out the AR of the offence intending to ‘make a gain for himself or another’ and/or ‘to cause loss to another’
Fraud Act 2006, s5
(3) ‘Gain’ includes a gain by keeping what one has, as well as getting what one does not have.
(4) ‘Loss’ includes a loss by not getting what one might get, as well as a loss by parting with what one has

Question 5

What do ‘gain’ and ‘loss’ include?

Answer 5

Fraud Act 2006, s5
(2) ‘Gain’ and ‘loss’—
(a) extend only to gain and loss in money or other property;
(b) include any such gain or loss whether temporary or permanent;
and ‘property’ means any property whether real or personal (including things in action and other intangible property)

Question 6

Does the gain and loss have to take place?

Answer 6

In all of the offences under ss. 2, 3 and 4, the ‘gain’ and/or ‘loss’ do not actually have to take place

Question 7

OFFENCE 1: What is fraud by false representation?

Answer 7

Fraud Act 2006, s2
(1) A person is in breach of this section if he—
(a) dishonestly makes a false representation, and
(b) intends, by making the representation—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to the risk of loss

Question 8

What are the 4 key elements of the offence?

Answer 8

1. That a representation was made in any way
2. That the representation was false (untrue or misleading and D knows that it is or might be untrue or misleading)
3. That the representation was made dishonestly
4. That D intended gain or loss by making that false representation- no gain or loss is actually required!! No one needs to be deceived in any way or actually suffer a gain or loss

Question 9

What is meant by dishonestly?

Answer 9

‘Dishonestly’ in s. 2(1)(a) refers to the test of dishonesty as per the decision in Barlow Clowes and Royal Brunei Airlines (theft act offences).
Test combines subjective and objective- what was D’s knowledge of the facts and was his conduct honest or dishonest by the standards of reasonable people.

Question 10

What is meant by representation?

Answer 10

Theft Act 1968, s2
(2) A representation is false if—
(a) it is untrue or misleading, and
(b) the person making it knows that it is, or might be, untrue or misleading.
(3) ‘Representation’ means any representation as to fact or law, including a representation as to the state of mind of —
(a) the person making the representation, or
(b) any other person.
(4) A representation may be express or implied

Question 11

How may representations be made?

Answer 11

They can be made in any format- words (spoken or written) or by conduct. It can also be by omission eg; failing to mention previous convictions.
Representations do not have to be made to a human and could be made via computer.

Question 12

What are the 2 parts to a false representation?

Answer 12

1. The fact that it is untrue or misleading
2. The knowledge of the maker that it is untrue or misleading

Question 13

What is meant by misleading?

Answer 13

Not defined in the act.
Parliament intended it to mean less than wholly true and capable of interpretation to the detriment of the victim.
It may involve a half truth eg: where an application for a job requiring a DBS check correctly states he does not have a criminal record but fails to state he recently has been charged with possession of indecent images.

Question 14

What if the untrue statement turns out to be true?

Answer 14

An untrue statement made in the honest belief that it is in fact true, would not suffice. Actual knowledge that something might be untrue is required and mere suspicion that it might be untrue would not be enough.

Question 15

Is there a limitation on the way in which the representation is expressed?

Answer 15

The representation may be express or implied and can be communicated in words or conduct. There is no limitation on the way in which the representation must be expressed, so it could be written, spoken or posted on a website

Question 16

Is a broken promise false representation?

Answer 16

A promise which is genuine at the time but later broken is not a false representation.
A false promise that was never genuine in the first place is a false representation- the person does not intend to do what he promised to do.

Question 17

How else can a representation be proved? Case?

Answer 17

A representation may be proved by inference
R v Greig [2010]- elderly person paid D vastly more for a job or product than it was worth. It was open for the jury to infer that D must dishonestly have misrepresented the value of that job or product, even if there is no direct evidence of any such misrepresentation

Question 18

False representation and inferences- case

Answer 18

Idrees v DPP [2011]
When an unidentified imposter presented himself to take a driving theory test in D’s name, it could be inferred that D was complicit in any false representations made by that person with a view to gaining a pass certificate in his name

Question 19

When is the offence of false representation complete? Case?

Answer 19

Treacy v DPP [1971]- The offence is complete the moment the false representation is made. The representation need never be heard or communicated to the recipient and, if carried out by post, would be complete when the letter is posted as it has left the control of D.

Question 20

Can false representation be made by the act of phishing?

Answer 20

The offence is committed by someone who engages in ‘phishing’ (the practice of sending out emails in bulk, usually purporting to represent a well-known brand in the hope of sending victims to a bogus website that tricks them into disclosing bank account details)

Question 21

Can false representation occur against a machine?

Answer 21

The offence of fraud applies to cases where the representation is made to a machine (for example, where a person enters a number into a ‘chip and PIN’ machine) (s. 2(5))

Question 22

OFFENCE 2: What is fraud by failing to disclose?

Answer 22

Fraud Act 2006, s3
A person is in breach of this section if he—
(a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and
(b) intends, by failing to disclose the information—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss

Question 23

What are the essential elements of the offence?

Answer 23

1. Dishonestly
2. Fails to disclose info where a legal duty to disclose exists
3. Intends by failing to disclose to make a gain for himself or another or cause loss to another or expose them to risk of loss. No actual gain or loss needs to result.

Question 24

What if the person who may suffer the loss or gain is not the person D has a relationship with?

Answer 24

the person who D intends to suffer loss does not need to be the person to whom D has a legal duty to disclose to.

Question 25

What does the term ‘legal duty’ mean?

Answer 25

Not been defined but includes duties under oral contracts as well as written
Law Commission’s Report on Fraud stated duties might arise from:
- statute
- where the transaction is one of the utmost good faith
from the express of implied terms of a contract
- from the custom of a particular trade or market
- from the existence of a fiduciary relationship between parties

Question 26

When will the legal duty to disclose information exist?

Answer 26

Not defined in the Act but will mean duties that exist under the civil law. Legal duties may arise from statute, legally binding contract, fiduciary relationship
- D’s actions give V a cause in action for damages; or
- if the law gives the victim the right to set aside any change in his/her legal position to which he/she may have consented as a result of the non-disclosure

Question 27

Does the information need to be substantial or serious information?

Answer 27

No- it just needs to be ‘some’ form of information.
If a person discloses 90% of the info and fails to disclose 10% they can still commit the offence, even if the undisclosed portion is unimportant.

Question 28

What is a fiduciary relationship?

Answer 28

Relationship of trust.
A fiduciary relationship is one relating to the responsibility of looking after someone else’s money in a correct way. Examples of such behaviour would include solicitors failing to share vital information with a client in the context of their work relationship, in order to carry out a fraud upon that client

Question 29

Do benefits recipients legally have to disclose their correct financial information? Case?

Answer 29

Where recipients of benefits dishonestly fail to disclose income etc. that they are legally required to disclose, fraud by failing to disclose is an appropriate charge (R v El-Mashta [2010])

Question 30

What cases will typically be covered by this type of fraud?

Answer 30

• Benefits recipients failing to disclose a change of circumstances or source of income
• Solicitor dishonestly failing to disclose info to client when carrying out a transaction on their behalf
• Trustee dishonestly failing to disclose info to a beneficiary
• An applicant for life insurance dishonestly failing to disclose a pre-existing medical condition

Question 31

OFFENCE 3: What is fraud by abuse of position?

Answer 31

Fraud Act 2006, s4
(1) A person is in breach of this section if he—
(a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position—
(i) to make a gain for himself or another, or
(ii) to cause loss to another or to expose another to a risk of loss.
(2) A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act

Question 32

Who is this form of fraud aimed at?

Answer 32

Aimed at those who are in a position to safeguard another’s financial interests, who are trusted to exercise discretion and act on that person’s behalf, but dishonestly abuses his position of trust intending to cause loss or make a gain.

Question 33

Is any actual gain or loss required?

Answer 33

As in all 3 different types of fraud, no actual gain or loss is required.

Question 34

When is the offence complete?

Answer 34

The offence is complete when D carries out the act or omission that is an abuse of his position.

Question 35

Can all the types of fraud be committed by act AND omission?

Answer 35

Yes!!!

Question 36

What are the similarities between this form of fraud and fraud by failing to disclose?

Answer 36

Both involve similar types of relationship eg: banker and client, solicitor and client, director and company, trustee and beneficiary.

Question 37

What other forms of relationship may fall into this category?

Answer 37

Employer and employee
Within a family
Between the context of voluntary work
In any context- where the parties are in the kind of relationship where one party is expected not to go against the financial interests of another.

Question 38

What is the meaning of the term position?

Answer 38

The ‘position’ that D occupies may be the result of an assortment of relationships
Law Commission definition: The necessary relationship will be present between trustee and beneficiary, director and company, professional person and client, agent and principle, employee and employer, or between partners. It may arise otherwise, for example within a family, or in the context of voluntary work, or in any context where the parties are not at arm’s length.

Question 39

What is the meaning of the term abuse of position? What does it amount to?

Answer 39

Abuse of position is not defined by the Act.
The following activities are expected to be covered by this offence:
- Employee of software company who uses his position to clone software products with the intention to sell them and make a financial gain
- An estate agent who values a house belonging to an elderly person at an artificially low price and then arranges for a friend to buy that house at that low price to sell it on and make a financial gain
- Someone who is employed to care for a disabled person and has access to his bank account, who then abuses his position of trust and uses the money to enter business ventures for his own profit

Question 40

OFFENCE 4: What is the offence of possession or control of articles for use in frauds?

Answer 40

Fraud Act 2006, s6
(1) A person is guilty of an offence if he has in his possession or under his control any article for use in the course of or in connection with any fraud

Question 41

What is the sentence for possession or control of articles for use in frauds?

Answer 41

Triable either way
Five years’ imprisonment and/or a fine on indictment

Question 42

What is the meaning of article?

Answer 42

Fraud Act 2006, s8
An ‘article’ can be anything whatsoever. For the purposes of ss. 6 and 7 of the Act, an ‘article’ includes any program or data held in electronic form eg: computer program that generates credit card numbers.
It is assumed it can be anything eg: data stored in electronic form, pen and paper, computer files with financial details

Question 43

Where can s6 be committed?

Answer 43

The offence under s6 can be committed anywhere, including the home of D. It is committed when D has articles in his/her possession and also when D has them in his control, so D may be some distance away from the articles and still commit the offence. The s6 offence applies to ‘any fraud’ so includes ALL fraud offences under the 2006 Act.

Question 44

What is the MR for this offence?

Answer 44

General intention that the article be used in connection with any fraud.
It is not necessary to prove D intended to use the article in any specific fraud, merely that D intended for the article to be used in any type of fraud

Question 45

Can someone be found guilty for future offences or past offences? Case?

Answer 45

However, the offence is only committed in respect of future offences and not offences that have already taken place (R v Sakalauskas [2014]). The offence can be committed if possession, or control is to enable another to commit an offence of fraud

Question 46

OFFENCE 5: What is the offence of making or supplying articles for use in frauds?

Answer 46

Fraud Act 2007, s7
(1) A person is guilty of an offence if he makes, adapts, supplies or offers to supply any article—
(a) knowing that it is designed or adapted for use in the course of or in connection with fraud, or
(b) intending it to be used to commit, or assist in the commission of, fraud

Question 47

What is the purpose of s7?

Answer 47

This offence ensures that any activity in respect of the making, supplying etc. of any ‘article’ for use in fraud offences is an offence. Making an ‘offer to supply’ would not require the defendant to be in possession of the ‘article’
Eg: person makes a viewing card for a satellite TV system, enabling him to view all satellite channels for free

Question 48

What are the 2 offences under s7?

Answer 48

s7(1)(a)- covers those who know an article is made to be used for fraud
s7(1)(b)- covers those who intend an article to be used for fraud

Question 49

What does article mean for this offence?

Answer 49

Same as above- covers any item including those in electronic form

Question 50

What does ‘making’ mean?

Answer 50

Creating

Question 51

What does ‘adapted’ mean?

Answer 51

Requires an article to have been adapted in some way from its original form.

Question 52

What does ‘supply’ mean?

Answer 52

It is interpreted in the same way for fraud offences as it is for supply of drugs. There needs to be a transfer of physical control and D needs to benefit from the transfer.

Question 53

Does D need to be in actual possession of the article?

Answer 53

No- offering to supply does not require D to possess the article.

Question 54

What is the MR of the offence?

Answer 54

D must act knowing that the article in question is designed or adapted for fraud or if he doesn’t know then he must act intending for it to be so used.
Knowledge that an article has been designed or adapted for use in fraud will be dependent upon the article.
Eg: forged credit cards or lists of credit card numbers do not have an innocent purpose!

Question 55

Example of this s7 offence

Answer 55

Someone makes an article specifically for use in fraud. It is a software programme to send phishing emails. He doesn’t know if anyone will use it. He commits the offence in s7(1)(a) as he is aware it is designed for use in fraud.
He wouldn’t commit the (b) offence as he does not have the necessary intention that it BE used for fraud.

Question 56

Example of when article can be used in fraud but also has innocent uses too

Answer 56

The manufactures of credit card readers are an example- they have an innocent purpose.
The other dishonest use would be those who use these devices to skim credit cards for credit card details. A manufacturer who intends a dishonest use of this nature would be guilty under s7(1)(b).

Question 57

OFFENCE 6: What is the offence of obtaining services dishonestly?

Answer 57

Fraud Act 2006, s11
(1) A person is guilty of an offence under this section if he obtains services for himself or another—
(a) by a dishonest act, and
(b) in breach of subsection (2).
(2) A person obtains services in breach of this subsection if—
(a) they are made available on the basis that payment has been, is being or will be made for or in respect of them,
(b) he obtains them without any payment having been made for or in respect of them or without payment having been made in full, and
(c) when he obtains them, he knows—
(i) that they are being made available on the basis described in paragraph (a), or
(ii) that they might be, but intends that payment will not be made, or will not be made in full

Question 58

What is the sentence for obtaining services dishonestly?

Answer 58

Triable either way
Five years’ imprisonment and/or a fine on indictment

Question 59

What is the type of offence under s11?

Answer 59

Unlike the other Fraud Act 2006 offences, the offence under s11 is not a conduct crime; it is a result crime and requires the actual obtaining of the service. However, the offence does not require a fraudulent representation or deception. The offence can be committed where the defendant intends to avoid payment or payment in full but the defendant must know that the services are made available on the basis that they are chargeable.

Question 60

What is the MR?

Answer 60

That D must know that the services are chargeable and must intend to avoid the charge or at least part of the charge at the time of obtaining the service.

Question 61

What is meant by service?

Answer 61

Not defined by the Fraud Act.
It can be assumed that it covers any form of service.

Question 62

What type of instances would this cover?

Answer 62

When someone sneaks in to watch a movie through a side door without payment.

Question 63

Are services provided for free covered?

Answer 63

Services provided for free are NOT covered by the offence. The service must be chargeable.

Question 64

OFFENCE 7: What is the offence of false accounting?

Answer 64

Theft Act 1968, s17
(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another,—
(a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
(b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;
he shall [commit an offence].
(2) For purposes of this section a person who makes or concurs in making in an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document

Question 65

What is the sentence for false accounting?

Answer 65

Triable either way
Seven years’ imprisonment on indictment

Question 66

What offences does s17 create?

Answer 66

• destroying, defacing etc. accounts and documents
• using false or misleading accounts or documents in furnishing information

Question 67

What are the 2 offences?

Answer 67

1. Creation or falsification of accounts (s17(1)(a)
2. Using false accounts s17(1)(b)

Question 68

Example of (1)(a)

Answer 68

Amending an invoice in order to claim higher expenses from an employer eg: altering the invoice and preparing a false invoice

Question 69

Example of (1)(b)

Answer 69

When a false invoice is actually sent into the company accounts department for payment.
It is falsification of FAILING to complete forms/accounts (a phone operator who fails to record calls has falsified the record).
An offence may be made out when someone doesn’t create a false document but uses a false document provided by someone else

Question 70

Can an offence under s17 be committed by an omission?

Answer 70

An offence under s. 17 can be committed by omission as well as by an act- this goes for both forms of the offence

Question 71

What is the MR?

Answer 71

Offender must know the relevant account, record or document is or might be misleading, deceptive or false. If he doesn’t know then he cannot commit the offence.
Must act dishonestly and with the intention to cause gain or loss.

Question 72

What is a record or account? Case?

Answer 72

A record or account need not necessarily be a document
Edwards v Toombs [1983], it was held that a turnstile meter at a soccer stadium was a record and thus within the scope of the section.
It will include payroll document, balance sheet etc…

Question 73

Is there a requirement to prove an intention to permanently deprive? What must be proved instead?

Answer 73

There is no requirement to prove an intention permanently to deprive but there is a need to show dishonesty as per the decision in Barlow Clowes and Royal Brunei Airlines. An intention to cause temporary loss to another may suffice. The requirement as to gain and loss is the same as for blackmail.
Dishonesty alone is not enough- D must act with an intention to cause loss or with a view to gain.

Question 74

What must the misleading, false or deceptive nature of the information be?

Answer 74

The misleading, false or deceptive nature of the information furnished under s. 17(1)(b) must be ‘material’ to D’s overall purpose, i.e. the ultimate gaining or causing of loss. Such an interpretation means that D’s furnishing of information need not relate directly to an accounting process and could be satisfied by lying about the status of a potential finance customer (R v Mallett [1978])